Part of the donor funds for Ukraine’s quick recovery is being channeled through the new Ukraine Recovery, Rehabilitation and Reforms Trust Fund (URTF) created by the World Bank late last year, whose size the bank intends to increase to $2 billion, WB Governor David Malpass said.
“We intend to increase this fund to $2 billion and to mobilize an additional $1 billion to $2 billion from private partners,” he said Wednesday at the third ministerial roundtable in support of Ukraine, which took place at the WB and IMF spring meeting in Washington.
Malpass specified that the mechanism was created to mobilize additional support from the International Finance Corporation (IFC) of the World Bank Group, which works with the private sector and has already allocated about $150 million to Ukraine’s private sector with support from donor partners across Europe.
“We have pledged to share risks with the IFC,” the WB chief noted.
He added that the Multilateral Investment Guarantee Agency (MIGA), part of the WB Group, would also help with this task and had already provided more than $116 million in guarantees for Ukraine since the war began.
“It is critical to support the country’s long-term growth through projects in sectors such as energy infrastructure, transportation, agriculture and human capital. Our investments will be accompanied by policy and reform advice and the structuring of viable projects that can mobilize private capital,” Malpass stressed.
As World Bank Regional Director for Eastern Europe Arup Banerjee told Interfax-Ukraine in late February of this year, $295 million had been accumulated in the URTF at the time.
The World Bank (WB) has set up a multilateral trust fund to support the Ukrainian government, the WB said in a statement.
The fund has attracted $250 million in seed financing.
“The Ukraine Recovery, Rehabilitation and Reform Trust Fund (URTF), which will be managed by the WB, will provide a coordinated mechanism for financing and supporting government activities,” the WB said in a press release.
According to the Swiss government’s commitments to the founding contribution and contributions from the governments of Austria, Iceland, Lithuania, the Netherlands, Norway and Sweden, the initial total amount of the fund is $250 million.
Canada and Japan have also pledged to support the URTF. Other partners are expected to join, the report said.
As the bank notes, due to the uncertainty of the situation in Ukraine, Kiev’s partners have to take a long-term approach to supporting the government’s efforts. Therefore, the fund has the structure of a flexible platform, which will provide the ability to respond quickly to changing circumstances and the needs of the country in the first 10 years of its operation.
The URTF will operate within the overall Multidonor Fund for Ukrainian Institutions and Infrastructure, which is part of the broader international support for the country and is coordinated by the World Bank group.
The WB recalls that to date it has mobilized $18 billion in emergency financing for Ukraine, taking into account donor commitments, of which more than $13 billion has already been disbursed. The largest donor is the United States.
The World Bank predicts the growth of the economy of Uzbekistan in 2022 by 5.3%, according to the updated WB economic review for the Europe and Central Asia region.
Earlier in April, the World Bank expected the country’s GDP to grow by 3.6% this year.
“According to forecasts, Uzbekistan’s GDP growth will slow to 5.3% in 2022 (in 2021 the economy grew by 7%) and will be 4.9% in 2023. Increasing difficulties in the field of logistics (supplies) associated with sanctions against Russia, will slow down the growth of private consumption,” the document says.
At the same time, according to the WB, private investment and exports are expected to grow steadily, and the current account balance of payments will improve, as Uzbekistan continues to benefit from high world commodity prices (gold, copper, natural gas) and increased remittances from labor migrants. .
“Foreign direct investment is not expected to increase in 2022, and the trade deficit will be covered primarily by government borrowing,” the review said.
According to the World Bank, higher commodity export revenues and “slow” government investment spending will reduce the budget deficit from 6.2% of GDP in 2021 to 4.4% in 2022. However, the deficit will be higher than planned (at 3%) due to higher government spending on social protection, health care, education and infrastructure development.
The government is expected to continue to adhere to its own borrowing restrictions. Thus, public debt and total external debt will gradually decrease to 32% and 55% of GDP, respectively, by the end of 2024.
The state budget of Uzbekistan for 2022 included GDP growth at the level of 5.9%, the inflation rate was planned to be reduced to 9%.
Earlier, the EBRD raised its growth forecast for the economy of Uzbekistan from 4% to 5.5%. The ADB forecast for the growth rate of the economy of Uzbekistan for the current year has not changed – 4%. According to the State Statistics Committee of Uzbekistan, in the first half of the year, the country’s GDP increased by 5.4%.
The World Bank has already begun work on fundraising and plans to create new trust funds at the request of Ukraine for $17 billion needed for urgent recovery, Roman Kachur, Alternate Executive Director for Ukraine at the World Bank, has said.
“To date, the government has prioritized the $17 billion needed for an urgent recovery, for the most necessary things until the end of 2023. To operate these funds, we are completing the registration of the trust funds,” Kachur said during an online conference of the Center for Economic Strategy on Tuesday .
According to him, the symbolic name of this fund will be MRIya – Multi-donor trust fund for recovery and institution and infrastructure.
Kachur recalled that on September 9, the World Bank and the European Commission presented a report prepared jointly with the UN and the government of Ukraine, according to which direct losses inflicted by Russia from the beginning of the war to June 1 amount to about $100 billion, economic losses – $250 billion, and funds to restore the destroyed until June 1 – about $350 billion.
Of these, the World Bank has set $105 billion as funds needed over the next 18-36 months, but given that “this is an unsustainable amount for either donors or the government,” the government has prioritized $17 billion.
The representative of Ukraine in the World Bank said that trust funds would have to act as a multiplier so that Ukraine could receive two or three dollars from one dollar of funds provided by donors.
“In fact, since Friday, September 9, the fundraising has already begun. We plan to hold a roundtable at the same level during the annual meeting of the IMF and World Bank in October as it was in April – at the level of finance ministers and heads of central banks of our donor partners – and in fact explain the situation and obtain certain commitments to provide funds,” Kachur said.
He said that since the beginning of the war, the World Bank has already transferred $9.4 billion from its own account and from the accounts of trust funds (including U.S. grants, UK guarantees), or 54 cents from every dollar of external support during this period.
At a meeting on Saturday, the Government of Ukraine decided to attract additional financing from the World Bank in the amount of $530 million as part of a joint project with the Bank and the International Development Association (IDA) “Supporting Public Expenditure to Ensure Sustainable Public Administration in Ukraine.”
“The loan will be provided on concessional terms under the guarantees of the UK and Denmark: the loan repayment period is 19 years with a five-year grace period,” the Finance Ministry said.
According to its release, the interest rate is 0.25% per annum (charged on the unused part of the loan).
The Ministry of Finance clarified that the funds will be used to pay for the work of public sector employees, provide pension payments and certain state social assistance programs, such as payment for housing and communal services, support for low-income families, disabled children and disabled since childhood, IDPs, as well as for paying medical services under the program of medical guarantees, etc.
As reported, the project “Support to public spending to ensure sustainable public administration in Ukraine” has been implemented since June 2022. The total amount of funds raised is $7.3 billion. The goal of this project is to maintain the sustainable ability of the government of Ukraine to carry out administrative activities and provide services for the performance of core government functions at the national and regional levels.
The World Bank Group on Monday, August 8, announced an additional $4.5 billion in grant funding to Ukraine from the United States under the PEACE project, which aims to help the government meet urgent needs caused by the ongoing war.
The United States, through the United States Agency for International Development (USAID), in coordination with the U.S. Treasury Department, is providing an additional $4.5 billion in direct budgetary support to the government of Ukraine to help mitigate the severe budget deficit caused by Putin’s brutal military aggression. USAID release.
According to him, the government of Ukraine will receive funding in tranches, starting with a payment of $3 billion in August.
The World Bank indicates that the additional funding will help maintain the government’s ability to perform core functions at the national and regional levels.
In particular, the funds will help the government of Ukraine cover social benefits, medical services and pensions that are necessary for the well-being of the country’s citizens and mitigating the social and economic consequences of the war.
“Ukraine needs the continuation of public services, including health care, education and social protection, to prevent further deterioration of living conditions and poverty,” World Bank Group President David Malpass said in the release.
He thanked the United States for its continued support through the World Bank’s rapid support mechanisms and for a generous grant that will greatly support the Ukrainian people.
The bank clarified that the additional funding is in addition to the $1.49 billion Investment Project Financing (IPF) approved in June 2022. To date, the World Bank has mobilized almost $13 billion in emergency funding, including commitments and pledges from donors, to support the continuation of essential public services in Ukraine and mitigate the effects of the war. As of the end of July 2022, more than $6.3 billion has been disbursed from this funding.
